Ad spend declines for first half of year, digital growth slows

September 25, 2008 4:28 PMJake Swearingen

Advertising spend works as a bit of the canary in the coal mine in a lagging economy. When the market constricts, one of the first things to go is the ad budget. News showing a decline in overall ad spend for the first half of the year should make everyone uneasy (as if you needed another reason).

Taken as a whole, ad spend declined by 1.6 percent compared to 2007 according to TNS Media Intelligence. More troubling is the second quarter of this year, which saw spending declining by 3.6 percent. That’s the largest drop in ad spending since the dark days of 2001.

Digital was one of the few mediums to see an increase in ad spending, which was up by eight percent year over year. But before everyone involved in online starts getting too happy, let’s be frank: A sinking tide lowers all ships. There’s much to recommend digital advertising in a recession — mainly that it’s cheap and return on investment is much easier to prove. But growth rates are slowing. In 2006 and 2007 digital was up by 17.3 and 15.9 percent respectively.

Still, there’s two bright spots for the remaining months of 2008 that the TNS numbers don’t show — the 2008 Olympics and the presidential campaign spending. Whether that will be enough to offset losses in this economy remains to be seen.